Can you afford not to take financial advice to plan for your future?

  • Leanne Lancaster
  • 14 February 2023
  • 10 mins reading time

The non-financial value of advice tends to be appreciated by most people. There seems to be an understanding that those who seek advice from a professional financial planner are generally more in control of their finances and experience greater peace of mind regarding money matters.

In fact, our most recent Money and Mind Report found that an impressive 86% of UK adults who invest feel on top of their finances, compared to 62% of the general population. Part of this could be attributed to the fact they are more likely to have a financial adviser. Over a third (34%) of those with over £50,000 invested are currently using an adviser, versus 8% of the general population (1).

But what about the financial benefits of taking financial advice? Can a value really be placed on having a financial plan in place?

In 2019, the ILC (International Longevity Centre UK) published a report which quantified the value of taking financial advice for people’s overall financial outcomes over 8 to 15 years. The key findings were:

  • The benefit of financial advice for the accumulation of pension wealth was £30,991.

  • In terms of financial assets, the benefit of financial advice was £16,715.

  • Taking the pension and financial wealth figures together, receiving advice provided an average total wealth boost of £47,706 (2).

That’s nearly £50,000 that you could potentially be missing out on by not consulting a financial adviser to help you plan for your future.

I don’t need an adviser; I can plan for my retirement myself

DIY is all the rage, and you can find ‘how to’ videos and tutorials for pretty much anything on the internet. But just because there is an online guide on how to rewire your house on a budget with no experience, it doesn’t mean you should give it a go.

There are similar risks around DIY investing and financial planning. Making a short-term DIY investing decision now could have a serious long-term effect on your finances.

The internet may well tell you about the prospects for different assets for the next 12 months, and even for longer term investment horizons. But general online advice is not tailored to your individual circumstances. These circumstances could include your likely earning power in two- or five-years’ time, the age of your dependants, your existing assets or insurance arrangements, your unique tax situation and your appetite for taking financial risks.

This is where a trusted financial adviser can step in. With the experience of putting long-lasting strategies in place for many different clients, an adviser can help you choose the products that are right for you. Some advisers can also add tailored cash flow modelling, which is used by financial planners to forecast your future finances. This could show you such things as: how large a nest egg you may want in order to retire at 60; how you might be able to save towards your children’s education; and how a pension plus an Individual Savings Account (ISA) pot could support your retirement plans.

Read more: How cash flow modelling can help you plan for your future

An adviser’s task is to help you fit together all the moving pieces – dreams, income, outgoings, and an uncertain economic landscape – to create a cohesive plan that aims to help you achieve your goals.

If you still have a taste for making your own DIY decisions, seeking financial advice does not rule that out. An adviser who understands you, your family, your appetite for risk and your financial life goals could build a plan that aims to takes care of the basics, while allowing you the freedom to also pursue a personal investment plan.

(1) Schroders Personal Wealth: Money and Mind Report II (April 2022)

(2) International Longevity Centre UK: What it’s worth – Revisiting the value of financial advice (November 2019)

Important information

The value of investments and the income from them can fall as well as rise and are not guaranteed. The investor might not get back their initial investment.

There is no guarantee by investing money it will keep level or beat inflation, particularly when inflation is high.

The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits which isn't guaranteed and can do down as well as up. The benefits of your plan could fall below the amount(s) paid in.

Any views expressed are our in-house views as at the time of publishing.

This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or part) without our prior written consent.

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